Web 2.0 companies don’t make money (yet), says the FT in a somewhat yawn-worthy article.
Little mention of very savvy acquisitions like MySpace (despite troubles monetizing well, the site’s half a billion valuation was still a steal), Flickr and del.icio.us (both excellent and relatively cheap buys), as well as YouTube (pricy but on its way to being really big business).
Don’t get me wrong. There is no question the market has been frothy in the last year or two. Some valuations are stupid when discussed as value (though valuation and value are two profoundly different things). From a perspective of market timing, which does indeed matter greatly to VC, we are still 5+ years out from mainstream market adoption of many of these technologies. No doubt some won’t make it (I am looking at you, Twitter). However I am certain that, at that point in time, many social tools of today will be “obvious” as incorporated features of tomorrow’s applications and, for the fundamental ones, operating systems. Non-social software will be as unimaginable then as the DOS command line GUI of 25 years ago is today. I am willing to stake money on that and so are a lot of other VCs.
Indeed, the best line of the whole article is the last. “The capabilities that are coming with Web 2.0 are very profound,” said Devin Wenig, head of the markets division of Thomson Reuters. “The Valley is usually right, and it’s usually early.”
Right on.
One Comment
In 2001 the Internet was (seen as) dead. In 2008 Web 2.0 (is seen) as dead. In both cases people have been right ;-)
Some musings on that topic in this (German) article: http://www.michaelreuter.org/2008/06/web-20—das-is.html
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[...] Web 2.0 and social sites won’t make any money - from advertising or otherwise - as they are confident, as Max Niederhofer is, that “Non-social software will be as unimaginable then as the DOS [...]
[...] Web 2.0 and social sites won’t make any money - from advertising or otherwise - as they are confident, as Max Niederhofer is, that “Non-social software will be as unimaginable then as the DOS [...]